Philip Morris International Surges Ahead: A Smoke-Free Strategy Fueling 2025's Long-Term Gains?

Philip Morris International (PM) has emerged as one of the standout performers in 2025, with its stock soaring 36.81% year-to-date (YTD) through April 17—a stark contrast to the S&P 500’s modest 10.18% return. This outperformance has sparked debate: Is PM truly the best-performing long-term stock of the year so far, and can it sustain this momentum?

The Numbers Tell a Story of Dominance

PM’s YTD gains place it in the top 10% of S&P 500 constituents, but its long-term trajectory is even more compelling. Over the past year, the stock has surged 88.27%, versus the S&P 500’s paltry 5.19% rise. Stretching further back, PM’s 5-year return of 172.02% nearly doubles the S&P 500’s 83.77% over the same period.

The Engine Behind the Growth: Smoke-Free Innovation

PM’s success hinges on its strategic pivot away from traditional cigarettes toward reduced-risk products like nicotine pouches (ZYN) and heated tobacco units (IQOS). These products now account for 40% of revenue, and their growth is accelerating:

• ZYN Nicotine Pouches: Q4 2024 sales jumped 46.2% year-over-year, with 2025 volume projections of 780–820 million cans (up 34%–41%).
• IQOS: Volume rose 5.1% in Q4 2024, driven by strong demand in Japan and Europe.
• VEEV Vaping Business: Expanded its European footprint, contributing to a 7.2% revenue increase in Q4 2024.

The company’s acquisition of Swedish Match in 2023, which brought ZYN into its portfolio, has been a linchpin. Analysts at Broyhill Asset Management note that ZYN’s popularity—despite regulatory hurdles—has fueled investor confidence, pushing PM’s stock to a 52-week high of $163.21 by mid-April.

Risks on the Horizon

While PM’s smoke-free strategy is paying off, challenges loom. The U.S. Food and Drug Administration (FDA) has yet to approve ZYN, and public health groups like the American Lung Association criticize nicotine pouches for containing carcinogens and high nicotine levels.

Additionally, regulatory scrutiny globally could slow adoption. In the U.S., youth experimentation with these products remains a concern, even if adult usage dominates. PM’s reliance on a few key markets—including Japan, the U.S., and Europe—also introduces geographic risk.

The Case for Long-Term Investment

PM’s dividend yield of 3.62% and consistent cash flow (2024 operating cash flow hit $12.2 billion) make it appealing for income-focused investors. Management’s 2025 outlook is bullish:
- Revenue growth: 6%–8%
- Smoke-free volumes: 12%–14% rise
- Adjusted EPS: $7.04–$7.17

Conclusion: A Leader in Transition

PM’s 2025 performance is undeniably strong, fueled by a bold shift to smoke-free products. Its YTD return of 36.81% and multi-year outperformance of the S&P 500 underscore its strategic agility. However, long-term investors must weigh this against regulatory risks and shifting consumer preferences.

For now, PM’s dominance in a transforming tobacco industry positions it as a top-tier performer—but sustaining this will require navigating FDA approvals, public health debates, and global market dynamics. The smoke-free bet is paying off, but the smoke hasn’t fully cleared.